Overview

(For Annual Average Rates of Growth of Manufacturing Output, see Table I; for Pattern of Output, see Table III; for Index Numbers of Production, Employment, and Productivity in Manufacturing Industries, see Table IV.)

Area

1980-88

1989-93

1994

1995

1996

1997

World1

2.7

0.3

6.4

2.4

2.5

5.8

Developed countries

2.4

-0.7

6.9

1.6

2.0

6.1

Less-developed countries

4.5

4.3

4.9

5.6

4.4

5.3

World1

Developed countries

Less-developed countries

1994

1995

1996

1997

1994

1995

1996

1997

1994

1995

1996

1997

All manufacturing

6

2

3

6

7

2

2

6

5

6

4

5

Food, beverages, tobacco

3

3

2

3

3

1

1

2

5

6

6

6

Textiles

3

-1

-1

4

3

-2

-4

2

3

0

2

5

Clothing, footwear

0

-2

-4

-1

1

-2

-5

-1

0

-1

-2

-1

Wood, wood products

5

0

0

3

5

1

0

3

3

-2

-4

-1

Paper, printing, publishing

3

1

0

4

2

1

-1

4

6

4

1

3

Chemicals

15

-6

3

5

19

-9

2

4

5

4

6

6

Building materials, etc.

4

3

1

4

5

2

-1

3

3

6

5

8

Base metals

6

3

1

6

5

3

-1

5

7

5

7

8

Metal products

6

6

1

2

7

6

0

2

6

2

4

2

Electrical equipment

8

12

9

14

8

12

10

15

10

12

8

6

Transport equipment

4

3

2

8

4

1

2

8

1

15

4

7

Production

Employment

Productivity

Area

1996

1997

1996

1997

1996

1997

World2

113

120

. . .

. . .

. . .

. . .

Developed countries

108

115

. . .

. . .

. . .

. . .

Less-developed countries

133

140

. . .

. . .

. . .

. . .

North America3

121

132

. . .

. . .

. . .

. . .

Canada

112

119

93

96

121

124

United States

118

127

97

98

122

130

Latin America4

115

118

. . .

. . .

. . .

. . .

Brazil

112

116

. . .

. . .

. . .

. . .

Mexico

117

127

. . .

. . .

. . .

. . .

Asia5

113

118

. . .

. . .

. . .

. . .

India

146

151

. . .

. . .

. . .

. . .

Japan

97

101

100

100

97

101

South Korea

161

172

96

92

167

186

Europe6

94

97

. . .

. . .

. . .

. . .

Austria

115

123

. . .

. . .

. . .

. . .

Belgium

107

112

. . .

. . .

. . .

. . .

Denmark

117

123

. . .

. . .

. . .

. . .

Finland

121

133

82

83

147

160

France

98

102

. . .

. . .

. . .

. . .

Germany (1991 = 100)

96

100

. . .

. . .

. . .

. . .

Greece

98

99

. . .

. . .

. . .

. . .

Ireland

176

205

116

. . .

151

. . .

Netherlands, The

109

114

. . .

. . .

. . .

. . .

Norway

115

118

. . .

. . .

. . .

. . .

Portugal

97

102

. . .

. . .

. . .

. . .

Sweden

121

130

. . .

. . .

. . .

. . .

Switzerland

103

109

. . .

. . .

. . .

. . .

United Kingdom

103

104

. . .

. . .

. . .

. . .

Rest of the world7

. . .

. . .

. . .

. . .

. . .

. . .

Oceania

109

110

. . .

. . .

. . .

. . .

South Africa

103

106

96

. . .

105

. . .

The world economy prospered in 1997. Total world output rose by more than 3%, with manufacturing growing by almost twice that rate and, unusually, with the economies of the industrialized countries outpacing those of less-developed nations. Though there were some warning signs by the end of 1997 of the crisis that began in mid-1997 in Thailand and then spread to other Asian economies, the rest of the world financial market remained unaffected until August 1998, when the turbulence spread following Russia’s declaration of a debt moratorium. As a result, the possibility of a more generalized slowdown in the world economy became real, and international industry observers feared that Western industrial economies, having failed to avoid the contagious ailing financial market, might also "catch" recession from Asia. (SeeSpotlight: The Troubled World Economy.)

In North America, where production had enjoyed a six-year increase, output accelerated in 1997. Industrial production in the U.S. rose 5% and was boosted by capital formation, which reached a 19-year high. Canada experienced similar results, with soaring business investment driving a 4.9% rise in industrial production. The strength of the industrial North American powerhouse helped produce a year of record growth in South America, most notably in Argentina, Chile, and Peru, where total output rose 7-8%.

In continental Europe, where the fiscal consolidation imposed by the Treaty on European Union had been implemented, activity was recovering, particularly in the peripheral regions. Industrial production rose nearly 4% in Germany and France; at least 4% in Austria, Belgium, The Netherlands, and Portugal; nearly 7% in Spain; and more than 15% in Ireland. The relative strength of the core EU economies had beneficial spillover effects in Eastern Europe (see Table II), most obviously in those countries that were successfully making the transition to a market economy. In Poland industrial output rose more than 50% during the 1990s, but in countries that were struggling to make the transition from a centrally planned economy output declined by 50% during that same period.

Country

1993

1994

1995

1996

1997

%2

Bulgaria

58

63

60

61

48

-22

Croatia

59

57

58

60

64

7

Czech Republic

68

70

76

77

81

5

Estonia

49

47

48

50

56

12

Hungary

77

84

88

91

101

11

Latvia

44

40

38

41

42

3

Poland

101

113

124

135

151

11

Romania

58

60

66

72

68

-6

Russia

65

51

49

47

48

2

Slovakia

70

74

80

82

Slovenia

74

79

80

81

The official data for Asia in 1997 showed few signs of the turmoil ahead. Across the region, healthy growth rates for the year as a whole were recorded--more than 7% for manufacturing in Asia, excluding Japan and Israel. Only in Thailand, where the troubles began, did output decline. Even in Japan, which of the major economies suffered most from the Asian crisis, industrial production rose more than 4%, although overall output rose less than 1%.

The changing pattern of activity was illustrated by patchy performances from some sectors. Even in a buoyant year output of clothing and footwear declined, whereas textiles recorded their first year of growth since 1994. At the opposite extreme, output of electrical equipment, including computers, rose 14%, faster than the 10% average of the previous three years.

The strength of activity in 1997 carried through into the first half of 1998, and for a time it was possible to believe that Western economies and financial markets would escape the worst of the Asian downturn. That view changed with the Russian debt moratorium, which produced a complete reassessment of the international economic outlook. It also became clear that the Japanese economy was even more severely affected than was previously thought--households increased their already very high rate of savings, knowing that, in a deflationary climate, goods in the shops would be falling rather than rising in price. There was a stark contrast between the 1994 Mexican crisis, when strong U.S. demand helped boost demand for Mexican exports, and the 1998 Asian crisis, in which Japan was unable to undertake the U.S. role.

As 1998 came to a close, a cloud hung over the global economy. Economic forecasts were downgraded, and there was a risk of recession. The Asian crisis stemmed from years of overinvestment and was compounded by a collapse in demand in that region. In addition an excess global supply of goods was forcing down prices.

Table of contentsIntroductionOverviewADVERTISINGAEROSPACEApparelAUTOMOBILESBeveragesBUILDING AND CONSTRUCTIONCHEMICALSELECTRICALEnergyGAMBLINGGAMES AND TOYSGEMSTONESHome FurnishingsINSURANCEMACHINERY AND MACHINE TOOLSMaterials and MetalsMICROELECTRONICSMININGPAINTS AND VARNISHESPHARMACEUTICALSPHOTOGRAPHYPRINTINGRETAILINGSHIPBUILDINGTELECOMMUNICATIONSTEXTILESTOBACCOTOURISMWood Products

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